Home  »  Company  »  Hikal Ltd.  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of Hikal Ltd.

Mar 31, 2023

Inventories which comprise raw materials, packing materials, work-in-progress and finished goods are carried at the lower of cost and net realisable value. (See detailed accounting policy in Note 3.6)

The write-down of inventories at year end amounted to H148.06 million (31 March 2022: H118.02 million). The write down of inventories are included in cost of materials consumed or changes in inventories of finished goods and work-in-progress in the statement of profit and loss.

The loss allowance on trade receivables has been computed on the basis of Ind AS 109, Financial Instruments, which requires such allowance to be made even for trade receivables considered good on the basis that credit risk exists even though it may be very low.

No trade or other receivable are due from directors or other officers of the company either severally or jointly with any other person. Nor any trade or other receivable are due from firms or private companies respectively in which any director is a partner, a director or a member.

The Company’s exposure to credit and currency risks, and loss allowances related to trade receivables are disclosed in Note 47.

The carrying amounts of the trade receivables include receivables which are subject to a factoring arrangement. Under this arrangement, the company has transferred the relevant receivables to the factor in exchange for cash. However, the company has retained credit risk. The company therefore continues to recognise the transferred assets in their entirety in its balance sheet. The amount subject to factoring agreement is presented as borrowing.

c) Terms/rights attached to equity shares

The Company has only single class of equity shares having a par value of H2 (31 March 2022, H2) per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

I n the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

B. Nature and purpose of reserves

i. Capital reserve

Capital reserve is created on merger/amalgamation.

ii. Capital redemption reserve

Capital redemption reserve represents redemption of redeemable cumulative preference shares in earlier years. The same can be used to issue fully paid bonus shares.

iii. Securities premium

Securities premium is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares inaccordance with provisions of Companies Act, 2013.

iv. State subsidy

State subsidy is created on receipt of government grants for setting up the factories in backward areas. The same will be utilised for expansion of business.

v. Contingency reserve

Contingency reserve is created by transferring funds from retained earnings to meet future contingencies.

vi. General reserve

Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.

vii. Equity instruments through other comprehensive income

The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated within the Equity instruments through Other Comprehensive Income. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

a) Nature of security:

i . Redeemable, non-convetible debentures (NCD) is secured by first pari passu charge on the fixed assets of the Company’s plants situated at Taloja, Panoli, Bangalore, R & D centre at Pune and second pari passu charge on entire current assets both present and future.

ii. Rupee term loan from banks is secured by first pari passu charge on the fixed assets of the Company’s plants situated at Taloja, Panoli, Bangalore, R & D centre at Pune and second pari passu charge on entire current assets both present and future.

iii. External Commercial borrowing from bank is secured by first pari passu charge on the fixed assets of the Company’s plants situated at Taloja, Panoli and Bangalore, R & D centre at Pune and office at CBD Belapur (Navi Mumbai) and second pari passu charge on entire current assets both present and future.

i v. Rupee term loan from financial institutions is secured by first pari passu charge on the fixed assets of the Company’s

plants situated at Taloja, Panoli and Bangalore, R&D centre at Pune and second pari passu charge on entire current assets both present and future.

v. Vehicle loans are secured by first charge on the said vehicles.

a) Nature of security and terms of repayment for secured borrowings:

i . Working capital loans from all banks are secured by first pari passu charge on all current assets of the Company and second pari passu charge on fixed assets both present and future situated at Company’s plants at Bangalore, Taloja and Panoli.

ii. Loans availed under bill discounting facility are against specific receivables, having tenure of 30 to 90 days and carrying interest ranging between 1.50% to 2.10% p.a.

b) Working capital loans are repayable on demand and carry interest ranging from 6.50% to 9.05% p.a.

Trade Receivables are non interest bearing and are generally on term of 30-120 days. Slight increase in Trade Receivables is in line with increase in revenue.

Contract Liabilities include advance received from customers. Contract Liabilities have decreased as compared to last year.

Contract Assets represents unbilled revenue from ongoing development contracts. Increase in balance attributes to increase in work for which billing milestone is yet to be achieved.

Contract liability include long-term advances which are received to deliver product on long-term period and short-term advances are adjusted against product delivered in current year.

The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off income tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Significant management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income and the period over which deferred income tax assets will be recovered.

(ii) Defined Benefit Plans Gratuity:

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service. The Company has obtained insurance policies with the Life Insurance Corporation of India (LIC) for eligible employees at Panoli plant and makes an annual contribution to LIC for amounts notified by LIC. The Company accounts for gratuity benefits payable in future based on an independent external actuarial valuation carried out at the end of the year using the projected unit credit method. Actuarial gains and losses are recognised as Other Comprehensive Income or Loss.

Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognised in the Company’s standalone financial statements as at balance sheet date:

Other long-term employee benefit plans Compensated absences:

The obligation for leave encashment is recognised in the same manner as gratuity. The Company’s liability on account of compensated absences is not funded and hence the disclosures relating to the planned assets are not applicable. Amount of H40.62 million (31 March 2022 H32.95 million) towards compensated absences is recognised as an expense and included in “Employee benefits expense” in the Statement of profit and loss during the year.

46 Leases:

The Company has a lease contract for building used in its operations. The Lease term is 9 years. The company has leasehold land for a period of up to 99 years The Company’s obligations under its lease is secured by the lessor’s title to the leased asset.

The Company also has certain leases of machinery/premises with lease terms of 12 months or less and leases of office equipment with low value. The Company applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.

B. Financial risk management

The Company has exposure to the following risks arising from financial instruments:

• Credit risk;

• Liquidity risk; and

• Market risk

i. Risk management framework

The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework.

The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The audit committee oversees how management monitors compliance with the Company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.

ii. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers.

The carrying amount of following financial assets represents the maximum credit exposure:

Trade and other receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.

The Company establishes an allowance for impairment that represents its estimate of expected losses in respect of trade and other receivables.

Cash and cash equivalents

The Company held cash and cash equivalents (including bank deposits) of H633.68 million at 31 March 2023 (31 March 2022: H496.46 million). The cash and cash equivalents (including bank deposits) are held with banks with good credit ratings and financial institution counterparties with good market standing.

Other than trade and other receivables, the Company has no other significant financial assets that are past due but not impaired.

iii. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The gross outflow disclosed in the above table represent the contractual undiscounted cash flows relating to financial liabilities held for risk management purposes and which are not usually closed out before contractual maturity.

iv Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company’s income or the value of its holdings of financial instruments.Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long-term debt. We are exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of our investments. Thus, our exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.

Currency risk

The Company is exposed to currency risk on account of its operating and financing activities. The functional currency of the Company is Indian Rupee.

v. Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates.

Fair value sensitivity analysis for fixed-rate instruments

The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through statement of profit and loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

48 Capital Management

As at 31 March 2023, the Company has only one class of equity shares. In order to maintain or achieve an optimal capital structure, the Company allocates its capital for distribution as dividend or re-investment into business based on its longterm financial plans.

For the purpose of the Company’s capital management, capital includes issued capital and other equity reserves. The primary objective of the Company’s capital management is to safeguard its ability to continue as going concern and to maintain and optimal capital structure so as to maximise shareholders value. The Company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of the financial covenants.

The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt and adjusted net debt to equity ratio. For this purpose, adjusted net debt is defined as total debt less cash and bank balances.

49 Contingent liabilities and commitments (to the extent not provided for) A. Contingent liabilities

(i) Direct and Indirect taxes

As at 31 March 2023

As at 31 March 2022

Income Taxes*

292.23

241.34

Excise Duty**

39.93

40.13

Cental Sales Tax (CST)***

2.97

2.82

Value Added Tax (VAT)****

11.27

11.20

* Above does not includes interest and penalty, if any

** In addition to above interest and penalty of H40.13 million was levied.

*** In addition to above for certain matters, penalty and interest of H6.14 million was levied during the assessment.

**** in addition to above penalty and interest of H11.27 million was levied during the assessment.

(ii) In connection with the alleged improper disposal of by-products by the Company in January 2022, statutory authorities have conducted investigations in relation to alleged non-compliance with certain environmental laws and regulations, and the matter is pending before the Courts and relevant statutory authorities.

In an earlier quarter, Maharashtra Pollution Control Board (MPCB) had directed the Company to stop manufacturing activities at its Taloja plant on grounds of not adhering to conditions stipulated in the relevant Consent to Operate. Subsequently, pursuant to an order of the Honourable Bombay High Court, MPCB granted permission on 29 June 2022 to re-start manufacturing activities at the plant. Further, the Company has also initiated proceedings against the party that was given responsibility of disposing this material.

Separately, the National Green Tribunal (‘NGT’) had constituted a committee to make recommendations in this regard. The Committee submitted its reports to NGT, after which the Company filed a writ petition in the Hon’ble Bombay High Court, inter alia, seeking to set aside the NGT order. Despite being informed about the pendency of the aforesaid writ before the Hon’ble Bombay High Court, in March 2023, NGT passed an order accepting the committee’s reports , which, includes recovery of compensation of H174.5 millions from the Company for non-compliance with environmental laws and regulations. The Hon’ble Bombay High Court, has stayed the said order passed by NGT.

(iii) In addition, the Company is subject to legal proceedings, claims and GST audit, which have arisen in the ordinary course of business. The Company has reviewed all its pending litigations and other matters and has adequately provided for where provisions are required and disclosed as contingent liability, where applicable in its financial statements. The Company’s management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect of the Company’s results of operations or financial condition.

Based on the advice of external legal counsel, the Company believes it has a good case on merits in these matters, and the Company is taking necessary steps, including legal measures, to defend itself. Accordingly, no provision is required in the financial results in this respect.

B. Commitments

As at

As at

31 March 2023

31 March 2022

Estimated amount of contracts remaining to be executed on capital account and not provided for tangible assets

947.83

1,187.31

Other non cancellable material commitment

957.24

-

51 Dues relating to Investor Education and Protection fund

During the year the Company has transferred H0.34 million to Investor Education and Protection fund. There are no other dues which need to be credited as at the year end to the Investor Education and Protection fund.

52 Corporate social responsibility

As per Section 135 of the Act, a CSR committee has been formed by the Company. The funds are utilised during the year on the activities which are specified in Schedule VII of the Act. The utilisation is done by way of direct and indirect contribution towards various activities.

Gross amount required to be spent by the Company during the year: H36.77 million (31 March 2022: H32.14 million)

57 Segment information

For management purposes, the Company is organised into business units based on its products and services and has two reportable segments, as follows:

Pharmaceuticals: Segment produces in Active Pharmaceutical Ingredients Crop protection: Segment manufactures in pesticides, herbicides.

The Chief Operating Decision Maker (“CODM”) evaluates the Company’s performance and allocates resources based on an analysis of various performance indicators by operating segments. The CODM reviews revenue and profit as the performance indicator for all of the operating segments and review the total assets and liabilities of an operating segment.

60 Contribution to Provident Fund as per Supreme Court Judgement

There are numerous interpretative issues relating to the Supreme Court (SC) judgement dated 28 February 2019 on Provident Fund (PF) on the inclusion of allowances for the purpose of PF contribution as well as its applicability of effective date. The impact is not expected to be material as per the assessment made by the company.

61 The Code on Social Security, 2020

The Code on Social Security, 2020 (‘the Code’) has been notified in the Official Gazette on 29 September 2020. The effective date from which the changes are applicable is yet to be notified and the rules are yet to be framed. Impact, if any, of the change will be assessed and accounted in the period in which the said Code becomes effective and the rules framed thereunder are published.

62 The Company does not have any Benami property, where any proceedings have been initiated or pending against the company for holding any Benami property.

63 The Company does not have any transactions with Companies struck off.

64 The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

65 The Company has not traded or invested in Crypto currency or Virtual currency during the financial year.

66 The Company has not advanced or loaned or invested funds to any other person/entities, including foreign entities (intermediaries) with the understanding that the intermediary shall:

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding party (ultimate beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

67 The Company has not received funds to any other person/entities, including foreign entities (Funding party) with the understanding (whether recorded in writing or otherwise) that the company shall:

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding party (ultimate beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

68 The Company does not have any such transaction which is not recorded in the books of account that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

69 Maintenance of Books of account under Section 128 of the Companies Act, 2013 The Company has defined process to take daily back-up of books of account maintained electronically and complied with the provisions of The Companies (Accounts) Rules, 2014 (as amended). However, the Company as a policy, has maintained logs of the daily back-up of such books of account only for last 30 days and hence audit trail in relation to daily back up taken was not available for full year.

70 The quarterly returns or statements of Current assets filed by the Company with the banks or financial institutions are in agreement with the books of account.

71 Other information

The figures for the previous year have been regrouped wherever necessary to conform to the current year’s presentation.


Mar 31, 2022

Deposits given as security

1) Margin money deposits with a carrying amount as at 31 March 2022 of ''177.09 million (31 March 2021- ''136.79 million) are earmarked towards non fund based facilities availed from banks

2) Bank deposits with a carrying amount as at 31 March 2022 of ''196.93 million (31 March 2021 ''197.62 million) are earmarked towards the Company’s rupee term loans and external commercial borrowing term loan availed from banks.

a. The Board of Directors of the Company at its meeting held on 9 May 2018, approved a proposal to issue bonus shares in the ratio of one equity share of ''2 each for every two equity share of ''2 each held by the shareholders of the Company as on the record date i.e 25 June 2018, which was approved by the shareholders by means of an ordinary resolution in the extra ordinary general meeting held on 11 June 2018. The Company allotted 41,100,250 equity shares as fully paid up bonus shares by capitalisation of securities premium amounting to ''82.20 million.

c. Terms/rights attached to equity shares

The Company has only single class of equity shares having a par value of ''2 (P.Y. ''2) per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

I n the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

B Nature and purpose of reserves i Capital reserve

Capital reserve is created on merger/amalgamation.

ii. Capital redemption reserve

Capital redemption reserve represents redemption of redeemable cumulative preference shares in earlier years.

iii. Securities premium

Securities premium is used to record the premium received on issue of shares. It is utilised in accordance with the provisions of the Companies Act 2013 (‘the Act’).

iv. State subsidy

State subsidy is created on receipt of government grants for setting up the factories in backward areas.

v. Contingency reserve

Contingency reserve is created by transferring funds from retained earnings to meet future contingencies.

vi. General reserve

Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.

vii. Equity instruments through other comprehensive income

The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated within the Equity instruments through Other Comprehensive Income within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

a. Nature of security :

i Rupee term loan from banks is secured by first pari passu charge on the fixed assets of the Company’s plants situated at Taloja, Panoli, Bangalore, R & D centre at Pune and second pari passu charge on entire current assets both present and future.

ii External Commercial borrowing from bank is secured by first pari passu charge on the fixed assets of the Company’s plants situated at Taloja, Panoli and Bangalore, R & D centre at Pune and office at CBD Belapur (Navi Mumbai) and second pari passu charge on entire current assets both present and future.

iii Rupee term loan from financial institutions is secured by first pari passu charge on the fixed assets of the Company’s plants situated at Taloja, Panoli and Bangalore, R & D centre at Pune and second pari passu charge on entire current assets both present and future.

iv Vehicle loans are secured by first charge on the said vehicles.

a. Nature of security and terms of repayment for secured borrowings :

i Working capital loans from all banks are secured by first pari passu charge on all current assets of the Company and second pari passu charge on fixed assets both present and future situated at Company''s plants at Bangalore, Taloja and Panoli.

ii Loans availed under bill discounting facility are against specific receivables, having tenure of 30 to 90 days and carrying interest ranging between 1.50% to 1.86% p.a.

b. Working capital loans are repayable on demand and carry interest ranging from 6.50% to 8.05% p.a.

Trade Receivbales have decreased due to collection from the customers.

Contract Liabilities include advance received from customers. Contract Liabilities have increased which is in line with increase in business as evidenced by increase in turnover, also company has received advance from two customer for order out of which one is long term advance.

Contact Assets represents unbilled revenue to customers. This is as a result of contract entered during the year. The similar contract was not there in the previous year.

The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off income tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Significant management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income and the period over which deferred income tax assets will be recovered.

The Company has utilised MAT credit of '' Nil (PY ''119.31 Million) in the books of account against income tax liabilities.

43. Earnings per share (EPS)

Basic EPS is calculated by dividing the profit attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the year.

Diluted EPS is calculated by dividing the profit attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the year, after considering adjustment for the effects of all dilutive potential equity shares.

(ii) Defined Benefit Plans Gratuity:

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service. The Company has obtained insurance policies with the Life Insurance Corporation of India (LIC) for eligible employees at Panoli plant and makes an annual contribution to LIC for amounts notified by LIC. The Company accounts for gratuity benefits payable in future based on an independent external actuarial valuation carried out at the end of the year using the projected unit credit method. Actuarial gains and losses are recognised as Other Comprehensive Income or Loss.

Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognised in the Company’s standalone financial statements as at balance sheet date:

Other long term employee benefit plans Compensated absences:

The obligation for leave encashment is recognised in the same manner as gratuity. The Company’s liability on account of compensated absences is not funded and hence the disclosures relating to the planned assets are not applicable. Amount of ''32.95 million (PY ''43.59 million) towards compensated absences is recognised as an expense and included in “Employee benefits expense” in the Statement of profit and loss during the year.

45. Leases:

The Company has a lease contract for building used in its operations. The Lease term is 9 years. The Company’s obligations under its lease is secured by the lessor’s title to the leased asset.

The Company also has certain leases of machinery/premises with lease terms of 12 months or less and leases of office equipment with low value. The Company applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.

B. Financial risk management

The Company has exposure to the following risks arising from financial instruments:

• Credit risk ;

• Liquidity risk ; and

• Market risk

i. Risk management framework

The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework.

The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The audit committee oversees how management monitors compliance with the company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.

ii. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers.

The carrying amount of following financial assets represents the maximum credit exposure:

Trade and other receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.

Cash and cash equivalents

The Company held cash and cash equivalents (including bank deposits) of ''496.46 million at 31 March 2022 (31 March 2021: ''413.18 million). The cash and cash equivalents (including bank deposits) are held with banks with good credit ratings and financial institution counterparties with good market standing.

Other than trade and other receivables, the Company has no other significant financial assets that are past due but not impaired.

iii. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The gross inflows/(outflows) disclosed in the above table represent the contractual undiscounted cash flows relating to financial liabilities held for risk management purposes and which are not usually closed out before contractual maturity.

iv. Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company’s income or the value of its holdings of financial instruments.Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. We are exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of our investments. Thus, our exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.

Currency risk

The Company is exposed to currency risk on account of its operating and financing activities. The functional currency of the Company is Indian Rupee.

v. Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates.

Exposure to interest rate risk

Company’s interest rate risk arises from borrowings. Borrowings issued at fixed and variable rates exposes to fair value interest rate risk. The interest rate profile of the Company’s interest-bearing financial instruments as reported to the management of the Company is as follows:

Fair value sensitivity analysis for fixed-rate instruments

The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through statement of profit and loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

47. Capital Management

As at 31 March 2022, the Company has only one class of equity shares. In order to maintain or achieve an optimal capital structure, the Company allocates its capital for distribution as dividend or re-investment into business based on its long term financial plans.

For the purpose of the Company’s capital management, capital includes issued capital and other equity reserves. The primary objective of the Company’s capital management is to safeguard its ability to continue as going concern and to maintain and optimal capital structure so as to maximise shareholders value. The Company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of the financial covenants.

The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt and adjusted net debt to equity ratio. For this purpose, adjusted net debt is defined as total debt less cash and bank balances.

48. Contingent liabilities and commitments (to the extent not provided for)

A. Contingent liabilities

As at 31 March 2022

As at 31 March 2021

Direct and Indirect taxes*

Income Taxes

241.34

241.34

Excise Duty**

40.13

40.13

Value Added Tax (VAT)***

11.20

11.20

Cental Sales Tax (CST)

2.82

2.82

* Above does not includes interest and penalty, if any ** In addition to above penalty of '' 40.02 million was levied.

*** In addition to above for certain matters, penalty and interest of '' 17.40 million was levied during the assessment.

(Currency : Indian Rupees in million)

As at

As at

31 March 2022

31 March 2021

B. Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for net of advances, tangible assets

1,187.31

1,160.46

In addition, the Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liability, where applicable in its financial statements. The Company’s management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect of the Company’s results of operations or financial condition.

50. Dues relating to Investor Education and Protection fund

During the year the Company has transferred ''0.28 Million to Investor Education and Protection fund. There are no other dues which need to be credited as at the year end to the Investor Education and Protection fund

51. Corporate social responsibility

As per Section 135 of the Act, a CSR committee has been formed by the Company. The funds are utilised during the year on the activities which are specified in Schedule VII of the Act. The utilisation is done by way of direct and indirect contribution towards various activities.

Gross amount required to be spent by the Company during the year: ''32.14 million (31 March 2021: ''25.81 million)

56. Segment information

For management purposes, the Company is organised into business units based on its products and services and has two reportable segments, as follows:

Pharmaceuticals: Segment produces in Active Pharmaceutical Ingredients Crop protection: Segment manufactures in pesticides, herbicides.

The Chief Operating Decision Maker (“CODM”) evaluates the Company’s performance and allocates resources based on an analysis of various performance indicators by operating segments. The CODM reviews revenue and profit as the performance indicator for all of the operating segments and review the total assets and liabilities of an operating segment.

Segment wise classification:-

A i) Primary segment reporting (by business segment)

The Company’s business segments based on product lines are as under:

- Pharmaceuticals

Segment produces/trades in Active Pharmaceutical Ingredients

- Crop Protection

Segment produces/trades in pesticides and herbicides

There is a customer which account for revenue of ''2,258.14 Million (Pr Yr. ''1,762.16 Million) in Crop protection segment and a customer which account for revenue of Nil (Pr Yr '' Nil) in Pharmaceuticals segment, other than these there are no transactions with single external customer which amounts to 10% or more of the Company’s revenue.

Figures in italics pertain to previous year 57. Related party disclosures

The note provides the information about the Company’s structure including the details of the subsidiaries and the holding company. The following table provides the total amount of transactions that have been entered into with related parties for the relevant financial year:

Terms and conditions of transactions with related parties

All related party transactions entered during the year were in ordinary course of business and are on arms length basis. Outstanding balances at year end are unsecured and interest free and settlement occures in cash.

59. Contribution to Provident Fund as per Supreme Court Judgment

There are numerous interpretative issues relating to the Supreme Court (SC) judgment dated 28th February, 2019 on Provident Fund (PF) on the inclusion of allowances for the purpose of PF contribution as well as its applicability of effective date. The impact is not expected to be material as per the assessment made by the company.

60. COVID-19 Assessment

The Company has considered the impact of COVID-19 pandemic on its business operations and financial results based on its review of current indicators of future economic conditions. However, the impact assessment of this pandemic is a continuing process given the uncertainties associated with its nature and duration, and accordingly, the Company will continue to monitor any material changes to future economic conditions.

61. The Code on Social Security, 2020

The Code on Social Security, 2020 (‘the Code’) has been notified in the Official Gazette on September 29, 2020. The effective date from which the changes are applicable is yet to be notified and the rules are yet to be framed. Impact, if any, of the change will be assessed and accounted in the period in which the said Code becomes effective and the rules framed thereunder are published.

62. The Company does not have any Benami property, where any proceedings have been initiated or pending against the company for holding any Benami property.

63. The Company does not have any transactions with Companies struck off.

64. The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

65. The Company has not traded or invested in Crypto currency or Virtual currency during the financial year.

66. The Company has not advanced or loaned or invested funds to any other person / entities, including foreign entities (intermediaries) with the understanding that the intermediary shall:

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding party (ultimate beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

67. The Company has not received funds from any other person / entities, including foreign entities (Funding party) with the understanding (whether recorded in writing or otherwise) that the company shall:

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding party (ultimate beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

68. The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961)

69. During the month of July 2022, due to heavy rains at Mahad, Maharashtra led to flooding which caused the operations at the Company’s Mahad Unit to remain shut for a period of 27 days. This has consequentially impacted the results for the year ended on 31 March 2022. The Company has filed an insurance claim, which is under assessment.

70. In connection with the alleged improper disposal of by-products by the Company in January 2022, statutory authorities are conducting relevant investigations, which are ongoing. Further, subsequent to the year-end, the Company was directed to stop manufacturing activities at its Taloja plant on grounds of not adhering to conditions stipulated in the relevant Consent to Operate. Based on the advice of external legal counsel, the Company believes it has a good case on merits in these matters, and the Company is taking necessary steps, including legal measures, to defend itself and restart manufacturing activities at the Taloja plant.

71. Other information

The figures for the previous year have been regrouped wherever necessary to conform to the current year’s presentation.


Mar 31, 2018

1 Company Overview

Hikal Limited (‘Hikal’ or ‘the Company’) was incorporated on July 8, 1988 having its registered office at 717/718, Maker Chamber V, Nariman Point, Mumbai 400 021.

The Company is engaged in the manufacturing of various chemical intermediates, specialty chemicals, active pharma ingredients and contract research activities.

The Company has its equity shares listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) in India.

The Company is operating in the crop protection and pharmaceuticals space.

2 Basis of preparation

2.1 Statement of compliance

The accompanying standalone financial statements have been prepared in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) (Ammendment) Rules, 2016 notified under section 133 of the Companies Act, 2013, (the ‘Act’) and other relevant provisions of the Act.

The Company’s standalone financial statements up to and for the year ended 31 March 2017 were prepared in accordance with the Companies (Accounting Standards) Rules, 2006 notified under the section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, read with Companies (Accounting Standards) amendments rules, 2016 applicable with effect from 1 April 2016 and other generally accepted accounting principles (Previous GAAP) in India and other relevant provisions of the Act.

As these are the Company’s first standalone financial statements prepared in accordance with Ind AS, Ind AS 101, First-time adoption of Indian Accounting Standards has been applied. An explanation of how the transition to Ind AS has affected the previously reported financial position, financial performance and cash flows of the Company is provided in Note 52.

The standalone financial statements for the year ended 31 March 2018 have been reviewed by the Audit Committee and subsequently approved by the Board of Directors at its meeting held on 9 May 2018.

2.2 Functional and presentation currency

These standalone financial statements are presented in Indian rupees, which is also the Company’s functional currency. All amounts have been rounded off to two decimal places to the nearest million, unless otherwise indicated.

2.3 Basis of measurement

The standalone financial statements have been prepared on a historical cost basis, except for the following:

- certain financial assets and liabilities (including derivative instruments) that are measured at fair value; and

- net defined benefit (asset)/ liability that are measured at fair value of plan assets less present value of defined benefit obligations.

2.4 Use of estimates and judgements

The preparation of the standalone financial statements in accordance with Ind AS requires use of judgements, estimates and assumptions, that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognised prospectively.

Assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ended 31 March 2018 are as follows:

a. Property, plant and equipment

Determination of the estimated useful lives of tangible assets and the assessment as to which components of the cost may be capitalised. Useful lives of tangible assets are based on the life prescribed in Schedule II of the Act. In cases, where the useful lives are different from that prescribed in Schedule II, they are based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers’ warranties and maintenance support.

b. Recognition and measurement of defined benefit obligations

The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation, actuarial rates and life expectancy. The discount rate is determined by reference to market yields at the end of the reporting period on government bonds. The period to maturity of the underlying bonds correspond to the probable maturity of the post-employment benefit obligations.

c. Recognition of deferred tax assets

Deferred tax assets are recognised for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases, and unutilised business loss and depreciation carryforwards and tax credits. Deferred tax assets are recognised to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses, depreciation carry-forwards and unused tax credits could be utilised.

2.5 Measurement of fair values

The Company’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

The Company has an established control framework with respect to the measurement of fair values, which includes overseeing all significant fair value measurements, including Level 3 fair values by the management. The management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified. When measuring the fair value of a financial asset or a financial liability, the Company uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

2.6 Current / non-current classification

An entity shall classify an asset as current when-

(a) it expects to realise the asset, or intends to sell or consume it, in its normal operating cycle;

(b) it holds the asset primarily for the purpose of trading;

(c) it expects to realise the asset within twelve months after the reporting period; or

(d) the asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

An entity shall classify all other assets as non-current.

An entity shall classify a liability as current when-

(a) it expects to settle the liability in its normal operating cycle;

(b) it holds the liability primarily for the purpose of trading;

(c) the liability is due to be settled within twelve months after the reporting period; or

(d) it does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

An entity shall classify all other liabilities as non-current.

Operating cycle

An operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents.

Based on the nature of services and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current - non-current classification of assets and liabilities.

b. Terms/rights attached to equity shares

The Company has only single class of equity shares having a par value of Rs.2 (PY Rs.2) per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

B Nature and purpose of reserves

i. Capital reserve

Capital reserve is created on merger/amalgamation.

ii. Capital redemption reserve

Capital redemption reserve represents redemption of redeemable cumulative preference shares in earlier years.

iii. Securities premium account

Securities premium is used to record the premium received on issue of shares. It is utilised in accordance with the provisions of the Act.

iv. State subsidy

State subsidy is created on receipt of government grants for setting up the factories in backward areas.

v. Contingency reserve

Contingency reserve is created by transferring funds from retained earnings to meet future contingencies.

vi. General reserve

General Reserve is a free reserve which is created by transferring funds from retained earnings to meet future obligations or purposes. The revaluation reserve as on 1 April 2016 has been transferred to general reserve.

After the reporting dates the following dividends were proposed by the directors subject to the approval at the annual general meeting. These dividends and tax therenon have not been recognised as liabilities in the year to which they pertains to and is recorded in the year in whcih they have been approved by the Annual General Meeting. Dividends would attract dividend distribution tax when declared or paid:

a Nature of security and terms of repayment for secured borrowings :

i Rupee term loan from banks is secured by first pari passu charge on the fixed assets of the Company’s plants situated at Taloja, Panoli and Bangalore, R & D centre at Pune and office at CBD Belapur (Navi Mumbai) and second pari passu charge on entire current assets both present and future.

ii External Commercial borrowing from one bank is secured by first pari passu charge on the fixed assets of the Company’s plants situated at Taloja, Panoli and Bangalore and second pari passu charge on entire current assets both present and future.

iii Rupee term loan from financial institutions is secured by first pari passu charge on the fixed assets of the Company’s plants situated at Taloja, Panoli and Bangalore, R & D centre at Pune and office at CBD Belapur (Navi Mumbai) and second pari passu charge on entire current assets both present and future.

iv External Commercial borrowing from financial institutions is secured by first pari passu charge on the fixed assets of the Company’s plants situated at Taloja, Panoli and Bangalore and second pari passu charge on entire current assets both present and future.

v Rupee term loan from others is secured by first pari passu charge on the fixed assets of the Company’s plants situated at Taloja, Panoli, Bangalore, R & D centre at Pune and office at CBD Belapur (Navi Mumbai) and second pari passu charge on entire current assets both present and future.

vi Vehicle loans are secured by first charge on the said vehicles.

a. Nature of Security and terms of repayment for secured borrowings :

i Working capital loans from IDBI Bank Limited of Rs.350 Million are secured by an exclusive charge on fixed assets of the Company’s plant situated at Mahad.

ii Working capital loans from Standard Chartered Bank of Rs.200 Million are secured by a first pari passu charge on office premises of the Company at CBD Belapur (Navi Mumbai).

iii Working capital loans from other banks are secured by first charge on all current assets of the Company and second pari passu charge on all fixed assets both present and future of the Company situated at Company’s plants at Bangalore, Taloja and Panoli.

iv Loans availed under bill discounting facility are secured against specific receivables, have tenure oRs.30 to 90 days and carry interest ranging between 1.5% to 10.50%

b. Working capital loans are repayable on demand and carry interest ranging from 1.5% to 13.30 % p.a.

Note: The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Significant management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income and the period over which deferred income tax assets will be recovered.

3 Employee benefits

i Defined Contribution Plans

The Company makes contributions towards superannuation fund and other retirement benefits to a defined contribution retirement benefit plan for qualifying employees. Under the plan, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit plan to fund the benefits.

ii Defined Benefit Plans

Gratuity:

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service. The Company has obtained insurance policies with the Life Insurance Corporation of India (LIC) for eligible employees at Panoli plant and makes an annual contribution to LIC for amounts notified by LIC. The Company accounts for gratuity benefits payable in future based on an independent external actuarial valuation carried out at the end of the year using the projected unit credit method. Actuarial gains and losses are recognised as Other Comprehensive Income or Loss. Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognised in the Company’s standalone financial statements as at balance sheet date:

A Reconciliation of the net defined benefit asset/(liability)

The following table shows a reconciliation from the opening balances to the closing balances for the net defined benefit asset/(liability) and its components

The above sensitivity analyses have been calculated to show the movement in defined benefit obligation in isolation and assuming there are no other changes in market conditions at the reporting date. In practice, generally it does not occur. When we change one variable, it affects to others. In calculating the sensitivity, project unit credit method at the end of the reporting period has been applied.

Compensated absences:

The obligation for leave encashment is recognised in the same manner as gratuity. The Company’s liability on account of compensated absences is not funded and hence the disclosures relating to the planned assets are not applicable. Amount of Rs.42.47 million (previous year Rs.41.89 million) towards compensated absences is recognised as an expense and included in “Employee benefits expense” in the Statement of profit and loss during the year.

4 Operating leases Leases as lessee

The Company has taken printers, copiers and office and residential premises under cancellable and non-cancellable operating lease arrangements. Lease rentals debited to the statement of profit and loss aggregate Rs.3.11 million (PY Rs.5.18 million) for non-cancellable lease and Rs.15.06 million (PY Rs.16.22 million) for cancellable lease

i Future minimum lease payments

The future minimum lease payments to be made under non-cancellable operating leases are as follows:

5 Financial instruments - Fair values and risk management

A Accounting classification and fair values

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value, if the carrying amount is a reasonable approximation of fair value.

B. Measurement of fair values

Valuation techniques and significant unobservable inputs

The following tables show the valuation techniques used in measuring Level 2 and Level 3 fair values, as well as the significant unobservable inputs used.

Financial instruments measured at fair value

C. Financial risk management

The Company has exposure to the following risks arising from financial instruments:

- Credit risk ;

- Liquidity risk ; and

- Market risk

i. Risk management framework

The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework.

The Company’s risk management policies are established to identify and analyse the risks faced by the Company to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The audit committee oversees how management monitors compliance with the company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.

ii. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers.

The carrying amount of following financial assets represents the maximum credit exposure:

Trade and other receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.

The Company establishes an allowance for impairment that represents its estimate of expected losses in respect of trade and other receivables.

At 31 March 2018, the maximum exposure to credit risk for trade and other receivables by geographic region was as follows.

At 31 March 2018, the Company’s most significant customer, accounted for Rs.1,760.32 million (31 March 2017: Rs.1,839.29 million) of the trade and other receivables carrying amount.

The Company held cash and cash equivalents of Rs.58.22 million at 31 March 2018 (31 March 2017: Rs.19.25 million). The cash and cash equivalents are held with banks with good credit ratings and financial institution counterparties with good market standing.

Other than trade and other receivables, the Company has no other financial assets that are past due but not impaired.

iii. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

Exposure to liquidity risk

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments.

Contractual cash flows

iv Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company’s income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. We are exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of our investments. Thus, our exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.

Currency risk

The Company is exposed to currency risk on account of its operating and financing activities. The functional currency of the Company is Indian Rupee. The Company uses forward exchange contracts to hedge its currency risk.

Exposure to currency risk

The currency profile of financial assets and financial liabilities as at 31 March 2018 and 31 March 2017 are as below:

Others includes AED and JPY

The forward contract booked during the year the includes future revenue transaction exposure.

The foreign exchange forward contracts outstanding as 31 March 2018 is Nil. (As on 31 March 2017 Nil).

Sensitivity analysis

A reasonably possible strengthening (weakening) of the Indian Rupee against US dollars, Euros and Singapore dollars at 31 March would have affected the measurement of financial instruments denominated in US dollars and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.

v. Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates.

Exposure to interest rate risk

Since the Company does not have any significant financial assets or financial liabilities bearing floating interest rates, a change in interest rates at the reporting date would not have any significant or material impact on the standalone financial statements of the Company.

Fair value sensitivity analysis for fixed-rate instruments

The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

Cash flow sensitivity analysis for variable-rate instruments

The Company does not have any financial assets or financial liabilities bearing floating interest rates. Therefore a change in interest rates at the reporting date would not affect profit or loss.

6 Capital Management

For the purpose of the Company’s capital management, capital includes issued capital and other equity reserves. The primary objective of the Company’s capital management is to safequard its ability to continue as going concern and to maintain and optimal capital structure so as to maximise shareholders value. The Company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of the financial covenants.

As at 31 March 2018, the Company has only one class of equity shares and debt of Rs.6,350.20 million. Consequent to such capital structure, there are no externally imposed capital requirements. In order to maintain or achieve an optimal capital structure, the Company allocates its capital for distribution as dividend or re-investment into business based on its long term financial plans.

The Company monitors capital using adjusted net debt to equity ratio. For this purpose, adjusted net debt is defined as total debt less cash and bank balances.

7 Details of Specified Bank Notes (SBN)

Schedule III of the Companies Act, 2013 was amended by Ministry of Corporate Affairs vide Notification G.S.R. 308(E) dated 30 March 2017. The said amendment requires the Company to disclose the details of Specified Bank Notes held and transacted during the period from 8 November 2016 to 30 December 2016. Details of Specified Bank Notes held and transacted during the period from 8 November 2016 to 30 December 2016 are as follows:

8 Sale of Research and Development (R&D) land and building situated at Bangalore

During the previous year, the Company has sold land and building at Bangalore R&D unit at a value of Rs.170 million. The difference between the selling price of land and the carrying value of land as on the date of sale is Rs. 0.56 million which has been adjusted against the loss on sale of Property, Plant and Equipment in Note 4.

As a consequence of the aforesaid sale, other property, plant and equipment aggregating Rs.25.77 million situated at Bangalore R&D unit has been written-off during the previous year. The balance assets (in the form of stores and spares etc.) in the balance sheet pertaining to Bangalore R&D unit aggregating Rs.35.79 million have also been charged to the Statement of Profit and Loss in the previous year.

9 Due relating to Investor Education and Protection fund

There are no dues which need to be credited as at the year end to the Investor Education and Protection fund

10 Corporate social responsibility

As per Section 135 of the Act, a CSR committee has been formed by the Company. The funds are utilised during the year on the activities which are specified in Schedule VII of the Act. The utilisation is done by way of direct and indirect contribution towards various activities.Gross amount required to be spent by the Company during the year: Rs.11.98 million (previous year: Rs.13.07 million)The areas of CSR activities and contributions made thereto are as follows:

11 Research and development expenditure :

A unit of the Company has been recognized by DSIR as in-house Research and Development unit. The Company claims 150% (PY 200%) exemption under Sec 35(2AB) of Income Tax Act 1961 for expenditure incurred on inhouse R&D activities.

12 Disclosure under Section 186 of the Companies Act, 2013 a) The details of loan under Section 186 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014 are as follows:

‘During previous year, the Company has sold 7,200 equity shares of Euro 10 each fully paid up of Hikal International BV (100% Subsidiary of the Company) for Euro 1 (equivalent Indian Rs.72). The said investment was fully written-off in earlier years. Consequent to sale of the investment in Hikal International BV, the Company has written-off the inter-corporate loans given to the said entity aggregating Rs.12.54 million during the previous year.

13 Capitalisation of expenditure

During the year, the Company has capitalised the following expenses of revenue nature to the cost of property, plant and equipment (tangible fixed assets)/capital work-in-progress (CWIP). Consequently, expenses disclosed under the respective notes are net of amounts capitalised by the Company.

14 Segment information

For management purposes, the Company is organised into business units based on its products and services and has two reportable segments, as follows:

Pharmaceuticals: Segment produces in Active Pharmaceutical Ingredients Crop protection: Segment manufactures in pesticides, herbicides, etc.

The Chief Operating Decision Maker (“CODM”) evaluates the Company’s performance and allocates resources based on an analysis of various performance indicators by operating segments. The CODM reviews revenue and gross profit as the performance indicator for all of the operating segments, and does not review the total assets and liabilities of an operating segment.

Based on above, following are reportable segments as per Ind AS 108

Segment wise classification :-A i) Primary segment reporting (by business segment)

The Company’s business segments based on product lines are as under :-Pharmaceuticals :Segment produces in Active Pharmaceutical Ingredients-Crop Protection : Segment produces in pesticides and herbicides, etc.

ii) Segment revenues, results and other information

15 Related party disclosures

The note provides the information about the Companys structure. The following table provides the total amount of transactions that have been entered into with related parties for the relevant financial year:

16 Explanation of transition to Ind AS

For the purposes of reporting as set out in Note 1, we have transitioned our basis of accounting from Indian generally accepted accounting principles (“IGAAP”) to Ind AS. The accounting policies set out in note 3 have been applied in preparing the standalone financial statements for the year ended 31 March 2017, the comparative information presented in these standalone financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS balance sheet at 1 April 2016 (the “transition date”).

In preparing our opening Ind AS balance sheet, we have adjusted amounts reported in standalone financial statements prepared in accordance with IGAAP An explanation of how the transition from IGAAP to Ind AS has affected our financial performance, cash flows and financial position is set out in the following tables and the notes that accompany the tables. On transition, we did not revise estimates previously made under IGAAP except where required by Ind AS.

Optional exemptions availed and mandatory exceptions

In preparing these standalone financial statements, the Company has applied the below mentioned optional exemptions and mandatory exceptions.

A. Optional exemptions availed

1 Property plant and equipment and intangible assets

As per Ind AS 101 an entity may elect to:

(i) measure an item of property, plant and equipment at the date of transition at its fair value and use that fair value as its deemed cost at that date

(ii) use a previous GAAP revaluation of an item of property, plant and equipment at or before the date of transition as deemed cost at the date of the revaluation, provided the revaluation was, at the date of the revaluation, broadly comparable to:

* fair value;

* or cost or depreciated cost under Ind AS adjusted to reflect, for example, changes in a general or specific price index.

The elections under (i) and (ii) above are also available for intangible assets that meets the recognition criteria in Ind AS38, Intangible Assets, (including reliable measurement of original cost); and criteria in Ind AS 38 for revaluation (including the existence of an active market).

(iii) use carrying values of property, plant and equipment, intangible assets and investment properties as on the date of transition to Ind AS (which are measured in accordance with previous GAAP and after making adjustments relating to decommissioning liabilities prescribed under Ind AS 101) if there has been no change in its functional currency on the date of transition. As permitted by Ind AS 101, the Company has elected to continue with the carrying values under previous GAAP for all the items of property, plant and equipment. The same election has been made in respect of intangible assets.

2 Investment in subsidiaries:

The Company has elected to adopt the carrying value under previous GAAP as on the date of transition in its standalone financial statements.

B. Mandatory exceptions

1 Estimates

As per Ind AS 101, an entity’s estimates in accordance with Ind AS at the date of transition to Ind AS at the end of the comparative period presented in the entity’s first Ind AS financial statements, as the case may be, should be consistent with estimates made for the same date in accordance with the previous GAAP unless there is objective evidence that those estimates were in error.

However, the estimates should be adjusted to reflect any differences in accounting policies.

As per Ind AS 101, where application of Ind AS requires an entity to make certain estimates that were not required under previous GAAP those estimates should be made to reflect conditions that existed at the date of transition (for preparing opening Ind AS balance sheet) or at the end of the comparative period (for presenting comparative information as per Ind AS).

The Company’s estimates under Ind AS are consistent with the above requirement. Key estimates considered in preparation of the standalone financial statements that were not required under the previous GAAP are listed below

Fair valuation of financial instruments carried at FVTPL.

Impairment of financial assets based on the expected credit loss model.

Determination of the discounted value for financial instruments carried at amortised cost.

2 Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable. Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortised cost has been done retrospectively except where the same is impracticable.

Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortised cost has been done retrospectively except where the same is impracticable.

Reconciliation of net profit as reported under previous Generally Accepted Accounting principles (“Previous GAAP”) and as per IND AS is given as follows.

Upfront fees on borrowings:

Under Indian GAAP transaction costs incurred in connection with interest bearing loans and borrowings are amortised upfront and charged to profit or loss for the period. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to profit or loss using the effective interest method.

Trade receivables:

Under Indian GAAP the Company has created provision for impairment of receivables consists only in respect of specific amount for incurred losses. Under Ind-AS, impairment allowance has been determined based on Expected Loss model (ECL).

Deferred tax assets (net):

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind-AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind-AS 12 approach has resulted in recognition of deferred tax on new temprorary differences which was not required under Indian GAAP Fair valuation of investment:

Under previous GAAP the Company accounted for current investments were carried at lower of cost or market value. Under Ind-AS, these investments are required to measured at fair value at the end of each reporting and resulting fair value changes are to recognised in Other comprehensive income.

Actuarial gain and loss:

Under Ind AS, all actuarial gains and losses are recognised in other comprehensive income. Under previous GAAP the Company recognised actuarial gains and losses in profit or loss. However, this has no impact on the total comprehensive income and total equity as on 1 April 2016 or as on 31 March 2017.

Reconciliation of equity as reported under previous Generally Accepted Accounting principles (“Previous GAAP”) and as per IND AS is given as follows.

Upfront fees on borrowings:

Under Indian GAAP transaction costs incurred in connection with interest bearing loans and borrowings are amortised upfront and charged to profit or loss for the period. Under Ind-AS, transaction costs are included in the initial recognition amount of financial liability and charged to profit or loss using the effective interest method.

Trade receivables:

Under Indian GAAP the company has created provision for impairment of receivables consists only in respect of specific amount for incurred losses. Under Ind-AS, impairment allowance has been determined based on Expected Loss model (ECL).

Proposed dividend:

Under Indian GAAP proposed dividends are recognised as a liability in the period to which they relate, irrespective of when they are declared. Under Ind-AS, a proposed dividend is recognised as a liability in the period in which it is declared by the company (usually when approved by shareholders in a general meeting) or paid. In the case of the company, the declaration of dividend occurs after period end. Therefore, the liability of recorded for this dividend has been derecognised against retained earnings.

Deferred tax assets (net):

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind-AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind-AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP Fair valuation of investment:

Under previous GAAP the Company accounted for current investments were carried at lower of cost or market value. Under Ind-AS, these investments are required to measured at fair value at the end of each reporting and resulting fair value changes are to recognised in Other comprehensive income.


Mar 31, 2017

1.Capitalization of expenditure

During the year, the Company has capitalized the following expenses of revenue nature to the cost of property, plant and equipment (tangible fixed assets)/capital work-in-progress (CWIP). Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the Company.

2. Segment reporting

The Company''s financial reporting is organized into two major operating divisions viz. crop protection and pharmaceuticals. These divisions are the basis on which the Company is reporting its primary segment information.

Joint revenues and expenses, if any, are allocated to the business segments on a reasonable basis. All other segment revenues and expenses are directly attributable to the segments.

Segment assets include all operating assets used by a segment comprising trade receivables, inventories, property, plant and equipment (tangible fixed assets) loans and advances. While most assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly is allocated to the segments on a reasonable basis. Segment liabilities include all operating liabilities of the segment comprising trade payables and other liabilities. Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

Note: The figures in italics are in respect of previous year

3. Related party disclosures List of related parties Parties where control exists :

Subsidiary companies

Hikal International B.V. Netherland (“HIBV”) (Upto11 December2016)

Acoris Research Limited (ARL’)

Key Management Personnel

Jai Hiremath Chairman and Managing Director

Sameer Hiremath President & Joint Managing Director

Relatives of Key Management Personnel

Sugandha Hiremath

Company exercising significant influence through voting power (‘significant shareholder’)

Kalyani Investment Company Limited (“KICL’)

Enterprises over which key management personnel and their relatives exercise significant influence

Decent Electronics Private Limited (“DEPL’)

Marigold Investments Private Limited (“MIPL!’)

Iris Investments Private Limited (“IIPL)

Karad Engineering Consultancy Private Limited (“KECPL’)

Ekdant Investment Private Limited (“EIPL’)

Shri Rameswara Investment Private Limited (“SRIPL’)

Shri Badrinath Investment Private Limited (“SBIPL’)

Rushabh Capital Services Private Limited (“RCSPL’)

4. Derivative Instruments

The Company uses derivative and forward contracts to hedge its risks associated with foreign currency fluctuations. Such transactions are governed by the strategy approved by the Board of Directors which provides principles on the use of these instruments consistent with the Company''s Risk Management Policy. The Company does not use these contracts for trading or speculative purposes. The Company does not have any outstanding derivative contracts as at 31 March 2017 and 31 March 2016.

5. Loans and advances in the nature of loans given to subsidiary as per the provisions of Regulations 34(3) of Securities Exchange Board of India (SEBI) (Listing obligations and disclosure requirements) Regulations 2015

Hikal International B.V (100% subsidiary) Rs, Nil (PY f 10.63 million) [Maximum amount outstanding during the year Rs, 12.54 Million (PYRs,10.63 Million)]

6. Dues relating to Investor Education and Protection Fund

There are no dues, which needs to be credited as at the year end to the Investor Education and Protection Fund.

7. Disclosure relating to Employee Benefits - As per revised AS - 15

Assumptions made for the actuarial valuation of Gratuity Liability and Compensated Leave Liability

Payment of Gratuity arises on account of future payments which a company is required to make in the event of an employee retiring or dying during the services or leaving due to certain reasons.

Rate of interest

As the payments are to be made in future on the happenings of the contingencies, it is necessary to use an appropriate rate of interest for the purpose of ascertaining the present value of such payments. While considering the various aspects in this behalf, a long-term view is taken and a suitable rate in calculating the valuation function is adopted.

Salary scale

Since the salaries or wages of employees will increase year after year, it is necessary to have rough approximation of the salary an employee will be receiving at the time of payment of gratuity. A suitable growth rate is assumed for this purpose. This is implied in the projected Unit Credit Method.

Mortality

Since the gratuity payments are to be made on the death of an employee while in service or on attainment of retirement age, it is necessary to employ a Mortality Table so that the number of employees who would retire on the attainment age could be estimated. The table used in the calculation of valuation functions is recent Mortality Table.

#These transactions pertain to payments made to the transporters for transport of goods in the ordinary course of business.

8. Sale of Research and Development (R&D) land and building situated at Bangalore

During the year, the Company has sold land and building at Bangalore R&D unit at a value of Rs,170 million. The difference between the selling price of land and the carrying value of land as on the date of sale is f 0.56 million which has been adjusted against the long-term loss on sale of Property, Plant and Equipment (tangible fixed assets) in Note 26.

As a consequence of the aforesaid sale, other property, plant and equipment (tangible fixed assets) aggregating Rs, 25.77 million situated at Bangalore R&D unit has been written-off during the year. The balance assets (in the form of stores and spares etc.) in the balance sheet pertaining to Bangalore R&D unit has aggregating Rs, 35.79 million have also been charged to the Statement of Profit and Loss.

#During the year, the Company has sold 7,200 equity shares of Euro 10 each fully paid up of Hikal International BV (100% Subsidiary of the Company) for Euro 1 (equivalent Indian Rs, 72). The said investment was fully written-off in earlier years. Consequent to sale of the investment in Hikal International BV, the Company has written-off the interoperate loans given to the said entity aggregating Rs, 12.54 million.

9. As per Section 135 of the Act, a Corporate Social Responsibility (CSR) Committee has been formed by the Company. The funds are utilized during the year on the activities which are specified in Schedule VII of the Act. The utilization is done by way of direct contribution towards various activities.

Gross amount required to be spent by the Company during the year was Rs, 13.07million (PYRs, 12.77 million).

10. The Board of Directors have recommended a dividend of Re 0.60 per share at their meeting held on 10 May 2017. Pursuant to the Companies (Accounting Standards)Amendment Rules, 2016 applicable with effect from 1 April 2016, this dividend (including dividend distribution tax) will be recorded and paid post the approval of shareholders in the Annual General Meeting.

11. Other information

Information with regard to other matters, as required by Schedule III to the Act is either nil or not applicable to the Company for the year.


Mar 31, 2016

1. Capitalization of expenditure

During the year, the Company has capitalized the following expenses of revenue nature to the cost of fixed asset/capital work-in-progress (CWIP). Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the Company.

2. Segment reporting

The Company''s financial reporting is organized into two major operating divisions viz. crop protection and pharmaceuticals. These divisions are the basis on which the Company is reporting its primary segment information.

Joint revenues and expenses, if any, are allocated to the business segments on a reasonable basis. All other segment revenues and expenses are directly attributable to the segments.

Segment assets include all operating assets used by a segment comprising trade receivables, inventories, fixed assets and loans and advances. While most assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly is allocated to the segments on a reasonable basis. Segment liabilities include all operating liabilities of the segment comprising trade payables and other liabilities.

Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

3. Related party disclosures List of related parties Parties where control exists :

Subsidiary companies

Hikal International B.V. (“HIBV”)

Acoris Research Limited (“ARL’)

Key Management Personnel

Jai Hiremath Chairman and Managing Director

Sameer Hiremath President & Joint Managing Director

Relatives of Key Management Personnel

Sugandha Jai Hiremath

Company exercising significant influence through voting power (‘significant shareholder’)

Kalyani Investment Company Limited (KICL)

Enterprises over which key management personnel and their relatives exercise significant influence

Decent Electronics Private Limited (”DEPL’)

Marigold Investments Private Limited (”MIPL’)

Iris Investments Private Limited (”IIPL’)

Karad Engineering Consultancy Private Limited (’’KECPL’)

Ekdant Investment Private Limited (”EIPL’)

Rameshwara Investment Private Limited (“RIPL’)

Badrinath Investment Private Limited (“BIPL’)

Rushabh Capital Services Private Limited ( “RCSPL’)

*During the previous year, the Company has subdivided its 16,440,100 equity shares of Rs, 10 each into 82,200,500 equity shares of Rs, 2 each on 16 February 2015. The disclosure of number of shares in the particulars of Shareholding and the disclosure of Earnings per share (in compliance with AS-20) has been arrived at after giving effect to the above sub-division.

4. Derivative Instruments

The Company uses derivative and forward contracts to hedge its risks associated with foreign currency fluctuations. Such transactions are governed by the strategy approved by the Board of Directors which provides principles on the use of these instruments consistent with the Company''s Risk Management Policy. The Company does not use these contracts for trading or speculative purposes. In the previous year ended on 31 March 2015, the Company had marked to market forward contracts outstanding as at 31 March 2015 which had resulted in a net gain of Rs,10.27 Million. The Company has not recognized the mark-to-market gain on prudent basis as it is notional in nature. The Company does not have any outstanding derivative contracts as at 31 March 2016.

5. Loans and advances in the nature of loans given to subsidiary as per the provisions of Regulations 34(3) of Securities Exchange Board of India (SEBI) (Listing obligations and disclosure requirement) Regulations 2015

- Hikal International B.V Rs,10.63 million (PY Rs, 9.07 million) [Maximum amount outstanding during the year Rs, 10.63 Million (PY Rs, 9.07 Million)]

6. Dues relating to Investor Education and Protection Fund

There are no dues, which needs to be credited as at the year end to the Investor Education and Protection Fund.

7. Disclosure relating to Employee Benefits - As per revised AS - 15

Assumptions made for the actuarial valuation of Gratuity Liability and Compensated Leave Liability

Payment of Gratuity arises on account of future payments which a company is required to make in the event of an employee retiring or dying during the services or leaving due to certain reasons.

Rate of interest

As the payments are to be made in future on the happenings of the contingencies, it is necessary to use an appropriate rate of interest for the purpose of ascertaining the present value of such payments. While considering the various aspects in this behalf, a long-term view is taken and a suitable rate in calculating the valuation function is adopted Salary scale

Since the salaries or wages of employees will increase year after year, it is necessary to have rough approximation of the salary an employee will be receiving at the time of payment of gratuity. A suitable growth rate is assumed for this purpose. This is implied in the projected Unit Credit Method.

Mortality

Since the gratuity payments are to be made on the death of an employee while in service or on attainment of retirement age, it is necessary to employ a Mortality Table so that the number of employees who would retire on the attainment age could be estimated. The table used in the calculation of valuation functions is recent Mortality Table.

Contribution to provident and other funds

On account of defined contribution plans the Company''s contribution to Provident Fund and Superannuation Fund aggregating Rs, 43.13 million (PY Rs, 36.58 million) has been recognized in the statement of profit and loss under the head employee benefits (Refer note23).

8. As per Section 135 of the Act, a CSR committee has been formed by the Company. The funds are utilized during the year on the activities which are specified in Schedule VII of the Act. The utilization is done by way of direct contribution towards various activities.

9. Other information

Information with regard to other matters, as required by Schedule III to the Act is either nil or not applicable to the Company for the year.


Mar 31, 2015

1 Company Overview

Hikal Limited ('Hikal' or 'the Company') was incorporated as a public limited Company on July 8, 1988 having its registered office at 717/718, Maker Chamber V Nariman Point, Mumbai 400 021.

The Company is engaged in the manufacturing of various chemical intermediates, specialty chemicals, active pharma ingredients and contract research activities.

The Company is operating in the crop protection and pharmaceuticals space.

2. c. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rd 2 (PY Rs 10) per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31 March 2015, the amount of per share dividend recognised as distributions to equity shareholders is Rs 1 on a face value of Rs 2 (PY Rs 4.50 on a face value of Rs 10).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

3. a. Nature of Security :

b. Term loan from three banks is secured by first pari passu charge on the fixed assets of the Company's plants situated at Taloja, Panoli, Bangalore and R & D Centre at Bangalore and second pari passu charge on entire current assets both present & future.

c. Term loan from one bank is secured by first pari passu charge by way of equitable mortgage on the immovable fixed assets together with buildings and other structures standing thereon including any plant, machinery and fixtures & fittings lying therein located at Company's plants at Panoli, Bangalore,Taloja and R & D Centre at Banglore both present and future.

d. Term loan from one bank is secured by first and exclusive charge by way of mortgage on immovable properties of the Company being land and building situated at Plot no 3A, phase 2, International Biothech Park, Hinjewadi, Pune.

e. Rupee term loan from a financial institution is secured by fixed assets of the Company and shall rank as a first charge over its R & D Unit situated at Bangalore and first pari passu charge on the fixed assets of the Company's plants situated at Bangalore, Panoli and Taloja and second pari passu charge on the current assets of the Company.

f. External commercial borrowing from a financial institution is secured by first charge on the fixed assets of the Company's plants situated at Taloja, Bangalore and Panoli and insurance proceeds (pertaining to the said movable fixed assets and current assets) ranking pari passu with the existing term loan lenders and second pari passu charge with the existing term loan lenders on all current assets of the Company.

g. Term loan from a financial corporation is secured by first and exclusive charge on the office premises of the Company at Nariman Point, Mumbai.

h. Vehicle loans are secured by first charge on the said vehicles.

4. a. Nature of Security and terms of repayment for secured/unsecured borrowings :

b. Working capital loan from IDBI Bank Limited of ' 350 Million are secured by first pari passu charge on entire current assets both present & future and exclusive charge on fixed assets of the Company's plant situated at Mahad.

c. Working capital loan from Standard Chartered Bank are secured by first pari passu charge on entire current assets both present & future and exclusive charge on office premises of the Company at CBD Belapur (Navi Mumbai).

d. Working capital loans from Other banks are secured by first charge on all current assets of the Company and second pari passu charge on all fixed assets both present and future of the Company situated at R&D Unit at Banglore and Company's plants situated at Bangalore, Taloja and Panoli.

b. Working capital loans are repayable on demand and carry interest ranging from 5% to 14.50 % p.a.

c. Inter corporate deposits repayable on demand and carries interest @ 12.5 % to 18 % p.a

5. During the previous year ended 31 March 2014, the Company at its extra ordinary general meeting held on May 17, 2013 decided to cancel / rescind the ESOP Scheme. Consequently, Rs 330.56 million in the trust was received by the Company and accounted as other income in previous year.

6. Capitalization of expenditure

During the year, the Company has capitalized the following expenses of revenue nature to the cost of fixed asset/capital work-in-progress (CWIP). Consequently, expenses disclosed under the respective notes are net of amounts capitalised by the Company.

7. Segment reporting

The Company's financial reporting is organised into two major operating divisions viz. crop protection and pharmaceuticals. These divisions are the basis on which the Company is reporting its primary segment information.

Joint revenues and expenses, if any, are allocated to the business segments on a reasonable basis. All other segment revenues and expenses are directly attributable to the segments.

Segment assets include all operating assets used by a segment comprising trade receivables, inventories, fixed assets and loans and advances. While most assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly is allocated to the segments on a reasonable basis. Segment liabilities include all operating liabilities of the segment comprising trade payables and other liabilities.

Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

8. Related Party Disclosures

List of related parties Parties where control exists :

Subsidiary Companies

Hikal International B.V ("HIBV") Acoris Research Limited ("ARL')

Key Management Personnel

Jai Hiremath Chairman and Managing Director Sameer Hiremath President & Joint Managing Director

Relatives of Key Management Personnel

Sugandha Jai Hiremath

Enterprises over which key management personnel and their relatives exercise significant influence

Decent Electronics Private Limited ("DEPL") Marigold Investments Private Limited ("MIPL") Iris Investments Private Limited ("IIPL") Karad Engineering Consultancy Private Limited ("KECPL") Ekdant Investment Private Limited ("EIPL") Shri Rameshwara Investment Private Limited ("RIPL") Shri Badrinath Investment Private Limited ("BIPL") Rushabh Capital Services Private Limited ( "RCSPL")

9. Leases

a) Operating Leases

The Company has taken printers, copiers and office and residential premises under cancellable and non- cancellable operating lease arrangements. Lease rentals debited to the statement of profit and loss aggregates to Rs 3.45 million (PY 2.03 million) for non-cancellable lease and Rs 14.73 million (PY 10.97 million) for cancellable lease.

10. Derivative Instruments

The Group uses derivative and forward contracts to hedge its risks associated with foreign currency fluctuations. Such transactions are governed by the strategy approved by the Board of Directors which provides principles on the use of these instruments consistent with the Company's Risk Management Policy. The Group does not use these contracts for trading or speculative purposes. The Group has marked to market the forward contracts outstanding as at 31 March 2015 which has resulted in a net gain to the Group. The Group has not recognised the resulted gain of Rs 10.27 Million, on prudent basis which is notional in nature. The mark to market loss on Currency/interest swap contracts a3ggregating ' Nil (PY 120.10 million) has been recognized in the statement of profit and loss.

11. Dues relating to Investor Education and Protection Fund

There are no dues, which needs to be credited as at the year end to the Investor Education and Protection Fund

12. Disclosure relating to Employee Benefits - As per revised AS - 15 Assumptions made for the actuarial valuation of Gratuity Liability

Payment of Gratuity arises on account of future payments which a company is required to make in the event of an employee retiring or dying during the services or leaving due to certain reasons.

Rate of interest

As the payments are to be made in future on the happenings of the contingencies, it is necessary to use an appropriate rate of interest for the purpose of ascertaining the present value of such payments. While considering the various aspects in this behalf, a long-term view is taken and a suitable rate in calculating the valuation function is adopted.

Salary scale

Since the salaries or wages of employees will increase year after year, it is necessary to have rough approximation of the salary an employee will be receiving at the time of payment of gratuity. A suitable growth rate is assumed for this purpose. This is implied in the projected Unit Credit Method.

Mortality

Since the gratuity payments are to be made on the death of an employee while in service or on attainment of retirement age, it is necessary to employ a Mortality Table so that the number of employees who would retire on the attainment age could be estimated. The table used in the calculation of valuation functions is recent Mortality Table.

13. As per Section 135 of the Companies Act, 2013, a CSR committee has been formed by the Company. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation and rural development projects

14. The previous year's figures have been reclassified to conform to this year's classification. details of which are as follows.

15. The previous year's financial statements were audited by a firm of Chartered Accountants other than M/s B S R & Co. LLP

16. Information with regard to other matters, as required by Schedule III to the Act is either nil or not applicable to the Company for the year.


Mar 31, 2013

Note 1

BACKGROUND

Hikal Limited (''Hikal'' or ''the Company'') was incorporated as a public limited Company on July 8,1988 having its registered office at 717/718, Maker Chamber V, Nariman Point, Mumbai-400 021.

The Company is engaged in the manufacturing of various chemical intermediates, specialty chemicals, Active pharma ingredients and Contract Research activities.

The Company is operating in the crop protection and pharmaceuticals space.

As At As At March 31, 2013 March 31,2012

Note 2

Contingent liabilities

Bills discounted with banks 949.14 774.41

Guarantee provided to Bank for borrowing made by subsidiary - 250.73

Estimated amount of contracts remaining to be executed on capital accounts and not provided for (net of advances) 92.54 152.65

Note 3

The company had entered into options & forward contracts to hedge its exposures to fluctuations in the past in foreign exchange. As the major percentage of the Company''s turnover is realised from exports hence the Company was of the opinion that the results of these transactions represent unrealized losses that are notional in nature. The gain/loss on these transactions was recoginsed as and when they fell due. The mark to market loss on March 31, 2013 on these option and forward contracts not recognized in statement of profit and loss amounts to f Nil (Previousyear as on March 31,2012 Rs.357.18 millions).

The Company has also entered into swap contracts against long term loans which will mature year on year upto August 2016. The Company is of the opinion that the "Mark to Market" loss of these transactions represent unrealized losses that are notional in nature. The gain/loss on these transactions will be recongised as and when they fall due. The mark to market loss on March 31,2013 on these swap contracts not recognized in statement of profit and loss amounts to Rs.116.17 millions (Previous year as on March 31,2012 Rs.95.46 millions)

Note 4

a) In terms of the Scheme of Arrangement ("the Scheme") under sections 391 to 394 read with Section 78,100 to 103 of the Companies Act, 1956 sanctioned by order dated March 30, 2012 of Hon''ble High Court of Judicature at Bombay and filed with the Registrar of Companies, Maharashtra on May 10, 2012, all the assets and liabilities of the research business of Acoris Research Limited (''Transferor Company'') has been taken over by the Company with effect from April 1, 2012, being the effective date. The details of assets and liabilities taken over by the Company is as follows:

b) In accordance with the said Scheme and as per the Hon''bie High Courts'' approval the assets and liabilities of Research business of the transferor company have been vested in the Company with effect from April 1, 2012 and have been recorded in accordance with the provisions of the Scheme as follows:

i) The Company has recorded all the assets and liabilities pertaining to the Transferor Company at the respective book values as appearing in the books of Transferor Company as on the appointed date.

ii) The excess of liabilities over assets of the Transferor Company aggregating Rs.134.56 millions have been transferred to Securities Premium Account of the Company.

iii) Further, the carrying value of the investment in the transferor company aggregating Rs.150.40 millions has been adjusted against Securities Premium Account of the Company.

c) In view of the aforesaid scheme, the profit and loss of the Research business is forming part of the current year profit and loss of the Company. Accordingly, the figure for the current year including EPS are strictly not comparable with those of the corresponding previous year.

Note 5

Capitalization of expenditure

During the year, the company has capitalized the following expenses of revenue nature to the cost of fixed asset/capital work-in-progress (CWIP). Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the company.

Note 6

Segment reporting

The Company''s financial reporting is organized into two major operating divisions viz. crop protection and pharmaceuticals. These divisions are the basis on which the Company is reporting its primary segment information.

Joint revenues and expenses, if any, are allocated to the business segments on a reasonable basis. All other segment revenues and expenses are directly attributable to the segments.

Segment assets include all operating assets used by a segment comprising debtors, inventories, fixed assets and loans and advances. While most assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly is allocated to the segments on a reasonable basis. Segment liabilities include all operating liabilities of the segment comprising creditors and other liabilities.

The Company''s operating divisions are managed from India. The principal geographical areas in which the Company operates are India, Europe, USA&Canadaand South EastAsia.

Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.

Note 7

Related Party Disclosures List of related parties Parties where control exists :

Subsidiary Companies

Hikal International B.V. ("HIBV")

Acoris Research Limited (ARL)

Key Management Personnel

Jai Hiremath Chairman and Managing Director

SameerHiremath President & Joint Managing Director

Relatives of Key Management Personnel

Sugandha Jai Hiremath

Enterprises over which key management personnel and their relatives exercise significant influence

Decent Electronics Private Limited ("DEPL)

Marigold Investments Private Limited Iris Investments Private Limited

Karad Engineering Consultancy Private Limited (''''KECPL)

Ekdant Investment Private Limited ("EIPL)

Shri Rameshwara Investment Private Limited ("RIPL)

Shri Badrinath Investment Private Limited ("BIPL)

Rushabh Capital Services Private Limited ("RCSPL)

Note 8

Amount due from subsidiaries as at March 31, 2013:

- Hikal International B.V Rs.6.50 millions (Previous year Rs.4.39 millions) [Maximum amount outstanding during the yearRs.6.50 millions (PreviousyearRs.4.39 millions)]

- Acoris Research Limited Nil (PreviousyearRs.628.03 millions) [Maximum amount outstanding during the year Nil (PreviousyearRs.628.03 millions)]

Note 9

Dues relating to Investor Education and Protection Fund. There are no dues, which needs to be credited as at the year end to the Investor Education and Protection Fund.


Mar 31, 2012

Note 1

As At As At March 31, 2012 March 31, 2011

Contingent liabilities

Bills discounted with banks 774.41 815.45

Guarantee provided to DBS Bank for borrowing made by subsidiary 250.73 301.46

Estimated amount of contracts remaining to be executed on capital accounts and not provided for (net of advances) 152.65 67.56

Note 2

a) From the year ended 31 March 2009 the Company had adopted principles of hedge accounting as set out in Accounting Standard 30 - "Financial Instruments Recognition and Measurement" issued by the Institute of Chartered Accountants of India to the extent that the adoption did not conflict with the existing mandatory accounting standards and other authoritative pronouncements of the Company Law and other regulatory requirements. With effect from April 1, 2011, the Company changed its method of accounting related to forward contracts and long term foreign currency monetary items by recognizing exchange difference in the profit and loss account in the period in which it arise in accordance with Accounting Standard 11 - The Effects of Changes in Foreign Exchange Rates. Had Company continued following principles of Accounting Standard 30, the profit before tax for the year ended March 31,2012 would have been higher by Rs.231.60 millions.

b) The Company has entered into forward/options contracts to hedge its exposure to fluctuations in foreign exchange for approx 30% of future exports. These contracts have been staggered over the next four years as the major percentage of the Company's turnover is realized from exports. The management is of the opinion that the mark to market losses of these transactions represents unrealized losses that are notional in nature and will not affect its ongoing business as the Company has requisite long term export orders to cover these contracts. The management is of the opinion that the fluctuation in currency movements against hedged contracts gets compensated by realization of a higher value of sales realizations and therefore, the actual profit/loss against such outstanding contracts crystallizes only on maturity of such contracts. The gain/ loss on these contracts will be recognized as and when they fall due. The mark to market valuation loss is at Rs.452.63 millions as at March 31,2012 (March 31,2011: Rs.295.28 millions).

c) The Honb'le High Court of Mumbai has approved the Scheme of Arrangement between Acoris Research Limited and Hikal Limited and their respective share holders and creditors on March 30,2012. As per sanctioned scheme, Research business of Acoris Research Limited will merge into Hikal Limited w.e.f April 1,2012.

Segment reporting

The Company's financial reporting is organized into two major operating divisions viz. crop protection and pharmaceuticals. These divisions are the basis on which the Company is reporting its primary segment information.

Joint revenues and expenses, if any, are allocated to the business segments on a reasonable basis. All other segment revenues and expenses are directly attributable to the segments.

Segment assets include all operating assets used by a segment comprising debtors, inventories, fixed assets and loans and advances. While most assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly is allocated to the segments on a reasonable basis. Segment liabilities include all operating liabilities of the segment comprising creditors and other liabilities.

The Company's operating divisions are managed from India. The principal geographical areas in which the Company operates are India, Europe, USA & Canada and South East Asia.

Note 3

Amount due from subsidiaries as at March 31,2012:

- Hikal International B.V Rs.4.39 Million (Previous year Rs.4.39 Million) [Maximum amount outstanding during the year Rs.4.39 Million (Previous year Rs.4.39 Million)]

- Acoris Research Limited Rs.628.03 Million (Previous year Rs.468.92 Million) [Maximum amount outstanding during the year Rs.628.03 Million (Previous year Rs.468.92 Million)]

Note 4

Dues relating to Investor Education and Protection Fund

There are no dues, which needs to be credited as at the year end to the Investor Education and Protection Fund.

The financial statement for the year ended March 31, 2011 had been prepared as per the then applicable pre- revised Schedule VI to the Act. Consequent to the notification of Revised Schedule VI under the Act, the financial statement for the year ended March 31, 2012 are prepared as per the Revised Schedule-VI. Accordingly, the previous year's figures have been reclassified to conform to this year's classification. Also, certain disclosures as per the pre-revised Schedule VI but not required under Revised Schedule VI have not been made for the previous year. The adoption of Revised Schedule VI for previous year's figures does not impact recognition and measurement principals followed for preparation of financial statements.


Mar 31, 2011

1. Background

Hikal Limited ('Hikal' or 'the Company') was incorporated as a public limited Company on 08 July 1988 having its registered office at 717/718, Maker Chamber V, Nariman Point, Mumbai 21.

The Company is engaged in the manufacturing of various chemical intermediates, specialty chemicals, Active pharma ingredients and Contracts Research activities.

The Company is operating in the crop protection and pharmaceuticals space.

As At As At

March 31, March 31, 2011 2010 i) Contingent liabilities

Bills discounted with banks 815.45 526.80

Guarantee provided to DBS Bank for borrowing made by subsidiary 301.46 361.20

Estimated amount of contracts remaining to be executed 67.56 148.98 on capital accounts and not provided for (net of advances)

ii) In earlier years, the Company had issued 12,000, 0.5% Foreign Currency Convertible Bonds (FCCB) of USD 1,000 each aggregating to Rs. 541.80 million. These bonds were:

- Convertible at the option of the bondholder at any time on or after 21 November 2005 but prior to the close of business on 10 October 2010 at a fixed exchange rate of Rs 44.93 per 1 USD and price of Rs 745 per share of par value of Rs 10 per share subject to adjustment in certain events i.e. issue of bonus shares, division, consolidation, reclassification of shares etc.

- Redeemable in whole but not in part at the option of the Company on or after 21 October 2008 and up and until seventh business day prior to 21 October 2010 if closing price of the Share is greater than 160 percent of the conversion price for a continuous period of 60 consecutive stock exchange trading days.

- Redeemable on maturity date on 21 October 2010 at 132.56% of its principal amount if not redeemed or converted earlier.

During the year, the Company has redeemed these bonds along with premium. Premium paid has been adjusted against securities premium account.

iii) a) From the year ended 31 March 2009 the Company has adopted principles of hedge accounting as set out in Accounting Standard 30 "Financial Instruments Recognition and Measurement" issued by the Institute of Chartered Accountants of India to the extent that the adoption did not conflict with the existing mandatory accounting standards and other authoritative pronouncements of the Company Law and other regulatory requirements. Accordingly, in respect of foreign currency loans/forward contracts which qualify for hedge accounting, gain of Rs 95.95 million on revaluation of such loans as at 31 March 2010 had been recognized in Cash flow hedge reserve and same has been reversed during the year .The company has also recognized a gain of Rs 37.10 million to be ultimately recognized in Profit and Loss account when the hedged highly probable forecast revenue impacts profit or loss.

b) The Company has entered into forward/options contracts to hedge its exposure to fluctuations in foreign exchange for approx 30% of future exports. These contracts have been staggered over four years as the major percentage of the Company's turnover is realized from exports. The management is of the opinion that the mark to market losses of these transactions represents unrealized losses that are notional in nature and will not affect its ongoing business as the Company has requisite long term export orders to cover these contracts. The management is of the opinion that the fluctuation in currency movements against hedged contracts gets compensated by realization of a higher value of sales realizations and therefore, the actual profit/loss against such outstanding contracts crystallizes only on maturity of such contracts. The gain/ loss on these contracts will be recognized as and when they fall due. The mark to market valuation loss is at Rs 295.28 million as at 31 March 2011 (2010:Rs. 458.80 million).

v) Segment reporting

The Company's financial reporting is organized into two major operating divisions viz. crop protection and pharmaceuticals. These divisions are the basis on which the Company is reporting its primary segment information Joint revenues and expenses, if any, are allocated to the business segments on a reasonable basis. All other segment revenues and expenses are directly attributable to the segments.

Segment assets include all operating assets used by a segment comprising debtors, inventories, fixed assets and loans and advances. While most assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly is allocated to the segments on a reasonable basis. Segment liabilities include all operating liabilities of the segment comprising creditors and other liabilities.

The Company's operating divisions are managed from India. The principal geographical areas in which the Company operates are India, Europe, USA & Canada and South East Asia.

vi) Related Party Disclosures

List of related parties

Subsidiary Companies

Hikal International B.V. ("HIBV")

Acoris Research Limited ("ARL")

Key Management Personnel

Jai Hiremath Vice Chairman and Managing Director

Sameer Hiremath Deputy Managing Director

Relatives of Key Management Personnel

Sugandha Jai Hiremath

Enterprises over which key management personnel and their relatives exercise significant influence

Decent Electronics Private Limited ("DEPL") Marigold Investments Private Limited Iris Investments Private Limited Karad Engineering Consultancy Private limited ("KECPL") Ekdant Investments Private limited ("EIPL") Rameshwar Investment Private Limited ("RIPL') Badrinath Investment Private Limited ("BIPL") Rushabh Capital Services Private Limited ("RCSPL")

xiii) Amount due from subsidiaries as at March 31, 2011 - Hikal International B.V Rs. 4.39 million (Previous year Rs. 4.36 Million) [Maximum amount outstanding during the year Rs. 4.39 Million (Previous year Rs. 4.36 Million) - Acoris Research Limited Rs 468.92 Million (Previous year Rs 291.80 Million) [Maximum amount outstanding during the year Rs 468.92 Million (Previous year Rs 291.80 Million)]


Mar 31, 2010

1 Background

Hikal Limited (Hikal or the Company1) was incorporated as a public limited Company on 08 July 1988 having its registered office at 717/718, Maker Chamber V, Nariman Point, Mumbai 21.

The Company is engaged in the manufacturing of various chemical intermediates, specialty chemicals, Active pharma ingredients and Contracts Research activities.

The Company is operating in the crop protection and pharmaceuticals space.

2. As At As At March 31, 2010 March 31, 2009

i). Contingent liabilities

Bills discounted with banks 526.80 544.97

Guarantee provided to DBS Bank for borrowing made by subsidiary 361.20 407.68

Estimated amount of contracts remaining to be executed 148.98 133.34 on capital accounts and not provided for (net of advances)

Premium till date on redemption of 12,000 0.5%

Foreign Currency Convertible Bonds of USD 1,000 each (Refer note no. 21 (ii) below) - 137.21

ii. 12,000 (Previous year 12,000) 0.5% Foreign Currency Convertible Bonds (FCCB) of USD 1,000 each aggregating to Rs 541.80 million (Previous year Rs 611.52 Million). These bonds are:

- Convertible at the option of the bondholder at any time on or after 21 November 2005 but prior to the close of business on 10 October 2010 at a fixed exchange rate of Rs 44.93 per 1 USD and price of Rs 745 per share of par value of Rs 10 per share subject to adjustment in certain events i.e. issue of bonus shares, division, consolidation, reclassification of shares etc.

- Redeemable in whole but not in part at the option of the Company on or after 21 October 2008 and up and until seventh business day prior to 21 October 2010 if closing price of the Share is greater than 160 percent of the conversion price for a continuous period of 60 consecutive stock exchange trading days. Redeemable on maturity date on 21 October 2010 at 132.56% of its principal amount if not redeemed or converted earlier.

During the year ended 31 March 2010 there has been no conversion of bonds into shares.

The Company has made the requisite provision for the premium payable on these Bonds of Rs 156.98 million (31 March 2009: Rs Nil) and has been adjusted against securities premium account.

iii. a) During the previous year ended 31 March 2009 the Company has adopted the principles of hedge accounting as set out in Accounting Standard 30 - "Financial Instruments Recognition and Measurement" issued by the Institute of Chartered Accountants of India to the extent that the adoption did not conflict with the existing mandatory accounting stand ards and other authoritative pronouncements of the Company Law and other regulatory requirements. Accordingly, in respect of foreign currency loans which qualify for hedge accounting, losses of Rs 283.55 million on revaluation of such loans as at 31 March 2009 had been recognized in Cash flow hedge reserve and the same has been reversed during the year The company has also recognized a gain of Rs 95.95 million to be ultimately recognized in Profit and Loss account when the hedged highly probable forecast revenue impacts profit or loss.

b) The Company has entered into forward/options contracts to hedge its exposure to fluctuations in foreign exchange for approx 30% of future exports. These contracts have been staggered over the next four years as the major percentage of the Companys turnover is realized from exports. The management is of the opinion that the mark to market losses of these transactions represents unrealized losses that are notional in nature and will not affect its ongoing business as the Company has requisite long term export orders to cover these contracts. The management is of the opinion that the fluctuation in currency movements against hedged contracts gets compensated by realization of a higher value of sales realizations and therefore, the actual profit/loss against such outstanding contracts crystallizes only on maturity of such contracts. The gain/ loss on these contracts will be recognized as and when they fall due. The mark to market valuation loss is at Rs 458.78 million as at 31 March 2010(31 March 2009: Rs 1,498.57 million).

iv Segment reporting

The Companys financial reporting is organized into two major operating divisions viz. crop protection and pharmaceuticals. These divisions are the basis on which the Company is reporting its primary segment information

Joint revenues and expenses, if any, are allocated to the business segments on a reasonable basis. All other segment revenues and expenses are directly attributable to the segments.

Segment assets include all operating assets used by a segment comprising debtors, inventories, fixed assets and loans and advances. While most assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly is allocated to the segments on a reasonable basis. Segment liabilities include all operating liabilities of the segment comprising creditors and other liabilities.

The Companys operating divisions are managed from India. The principal geographical areas in which the Company operates are India, Europe, USA & Canada and South East Asia.

v. Related Party Disclosures

List of related parties Entities where control exists

Hikal International B.V. ("HIBV") Acoris Research Limited ("ARL")

Key Management Personnel

Jai Hiremath Vice Chairman and Managing Director

Sameer Hiremath Deputy Managing Diector

Relatives of Key Management Personnel

Sugandha Jai Hiremath

Enterprises over which key management personnel and their relatives exercise significant influence

Decent Electronics Private Limited

Marigold Investments Private Limited

Iris Investments Private Limited

Karad Engineering Consultancy Private limited

Ekdant Investments Private limited

Rameshwar Investment Private Limited ("RIPL")

Badrinath Investment Private Limited ("BIPL")

vi Amount due from subsidiaries as at March 31,2010:

- Hikal International B.VRs 4.36 million (Previous year Rs Nil) [Maximum amount outstanding during the year Rs 4.36 Million (Previous year Rs 244.64 Million)]

- Acoris Research Limited Rs 291.80 Million (Previous year Rs 115.78 Million) [Maximum amount outstanding during theyear Rs 291.80 Million (Previousyear Rs 136.87 Million)]

- Marsing & Co Limited A/S Rs 81.40 Million (Previous year Rs 108.68 Million) [Maximum amount outstanding during the year Rs 108.68 Million (Previous year Rs 108.68 Million)]

vii. There are no dues, which needs to be credited as at the year end to the Investor Education and Protection Fund.

viii. Figures in italics are for the previous year. Figures for the previous year have been regrouped where necessary to conform to current years classification. xxi. The figures of previous year ended 31 March 2009 were audited by another firm of Chartered Accountants.

Get Instant News Updates
Enable
x
Notification Settings X
Time Settings
Done
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X